And I’m not just talking about tariffs
In fact, let’s not talk about tariffs, since that’s the one thing everybody seems to be fixated on. Let’s instead talk about other things, which no one’s talking about.
- Bringing jobs back to the US, getting US companies to build factories in the US. Trump keeps saying he’s going to do this. In fact, when he was in office, he said he was going to make the massive tax breaks he gave to corporations contingent on them bringing their business operations back to the US. Except when those tax cuts came around–and they were massive–that requirement was nowhere to be seen. And he never talked about it anymore. Until now, when he’s running for office again and he talks about it incessantly. Corporations used a lot of the extra money Trump and Republicans in congress gave him to buy back theit own stock, enriching their own executives who nowadays mostly get paid based on the value of their companies’ stock. As a result of not doing what he said he was going to do, Americans who voted for him based on his promises lost jobs. And those jobs didn’t come back and start expanding til President Biden got elected. And there’s no reason to believe Trump’d do any different now, or incentivize US corporations to build out in the US beyond just lip service. He just wants to give corporations and rich people free money, so his economy–or more specifically the stock market–looks good. Exploding deficits be damned, which is what happened already when he was President. He won’t be alive to see the long-term affects of that. As a result of the favors he did, and the piles of money he gave to corporations and rich people, the US actually lost manufacturing jobs during his presidency, precisely because the strings he said he was going to attach, he didn’t attach. So why would he do any differently?
- The Federal Reserve. Trump appointed the current Federal Reserve Chairman, Jerome Powell. Presidents can do that at their whim. Although beyond that point, the Fed director has traditionally had almost complete autonomy and a lot of latitude about how they do their job. (We’ll get back to that in a second.) Then almost from Powell’s first day on the job, Trump whined and complained about him. Why? Because he wanted Powell to drop interest rates to zero. What happens when the Fed does that? You and I still can’t borrow money for free. But banks and corporations pretty much can. As much as they want. Forever. Meaning Trump wanted to give them even more of a supply of unlimited free money on top of those massive tax cuts. Why didn’t Powell do as Trump demanded? Probably because the economy was already doing OK, and dropping interest rates to zero would’ve been incredibly risky, because in the event of an unexpected downturn, or unanticipated financial disaster, if interest rates were already at zero, the Fed would have no ability to do anything to help; no available emergency measures to save the economy by temporarily and forcefully increasing the amount of money around. And, of course, that’s exactly what happened when COVID came around. And thank God Powell hadn’t done Trump’s bidding, because had interest rates already been at zero, as Trump wanted, the Fed would not have been able to do anything to save the economy from crashing. Which it did a really good job at. And a lot of the reason the US did a lot better than other countries recovering is the Fed left itself with a fair amount of room to maneuver. Also, remember those early days, when congress and Trump couldn’t get their act together to help people out; couldn’t even agree on how bad the pandemic was? It was Jerome Powell and the Federal Reserve that stepped in and initiated and administered most of the emergency programs to save small businesses, which helped a lot. But if Trump gets elected, he will replace Powell, and instead appoint someone he can completely order around. He hasn’t said it, but no one’s asked him. And he strongly hinted at it Tuesday at the Economic Club of Chicago. I will stake all my experience as a business journalist on this happening. And it would be a disaster. Maybe not a big enough political issue to make a fuss over, like it won’t move polls. But it would be a huge disaster.
- The TPP. Remember that? It’s OK, nobody does. Obama negotiated it. Trump killed it in the early days of his presidency. If you do remember it, I realize it’s controversial my including it here. I took a lot of heat from readers saying I supported it way back when. That’s because international conglomerates and bankers liked it. And yeah, it could’ve cost the US some manufacturing jobs, but Trump then lost those jobs anyway. What was it? An international trade agreement between the US and countries in Asia (and some in South America), to the specific exclusion of China. Basically, it was a trade pact meant to screw over China. And put US corporate might in a position to lead in Asia. And countries like Vietnam and Thailand were eagerly on board because they hated doing business with China. Because the US is generally a lot less corrupt and a lot more straight-up and equitable to its partners when it comes to business, than China is. Everybody in the region really hated doing business with China vs. the US. But after Trump killed the deal, they had to turn to China for money and influence. They had no choice. Trump actually accellerated China’s economic hold on the rest of Asia by putting tariffs on Chinese goods, so they moved a lot of manufacturing to other countries in the area to evade these tariffs. Now there’s a train going from Bangkok to the capital of Laos, which will very soon be a high-speed connection to Beijing. Big loss for the US.
Those are but a few examples.
So Trump better for the economy (forget about tariffs edition)?
Big nah.